The theatre's owner Century Venues, which purchased the building in 2016, estimates a once-off investment of $11.5 million would allow the theatre to reopen as a multi-purpose venue seating 900 people.

The theatre would form part of an entertainment circuit originating in Sydney that would help bring contemporary music and comedy to regional NSW.

Century's executive director Greg Khoury said the Victoria Theatre was among a small group of privately owned historic theatre buildings around the state that 'fell through the cracks' of existing funding models.

"The challenge at all levels is that governments have their own cultural infrastructure to maintain. That is understandably their first focus," he said.

"But if the issue of these last remaining theatres is not dealt with we run the risk of losing them.

"We are saying that, subject to economic interrogation, most of these theatres inherently have a case for government investment."

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The Heritage Council of NSW and the City of Newcastle has approved a masterplan for the operation of the Victoria Theatre.

In addition, 10 ambassadors have been appointed to drive the campaign to restore the iconic theatre.

Century Venues has spent about $750,000 on the building to date and will commit about $2million to the restoration fund.

In an effort to facilitate a collaborative investment in the theatre's restoration, Century's Venues has offered to place the building into a not-for-profit trust on the proviso that it would run the theatre business.

"The justification for the investment is not what the theatre itself produces internally but its economic flow-on effects to the neighbouring area and the community," Mr Khoury said.

"If you look at all of the remaining theatres in Sydney and a couple of others that we know of, the Victoria is the only one that ticks every box that can makes it imminently and easily returnable."

A business case for the project argues the Victoria Theatre has the potential to fill a niche that exists between larger theatres, such as the Civic, and several smaller venues.

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